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We did it! 100 editions of the newsletter!
What will we do with the next 100? I don’t know…that’s up to you? As a gift to me on the 100th edition, take about 2 minutes to share your ideas with me to add value to the newsletter and make sure I continue to deliver fun and games for the masses of ticket folks.
I’ll be in San Francisco from September 15-17, leading a workshop in Mountain View on the 16-17.
I will be trying to see a baseball game on the 15th. So if y’all are around, let me know.
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To the Tickets!
- Club valuations say less about the real value of the clubs and more about the amount of investment money floating around and the “Premium Power” of owning a team or a part of one.
- As much as this is a wise investment, the situation in Miami is closer to gambling than any supreme strategy.
- The MLS expansion strategy offers a lot of product, but the quality is what is needed to push the league forward.
Hello, I’m Dave.
Welcome to the 100th edition of the newsletter.
If you are new here, I have themes that will definitely emerge over time.
As we kick off this week, we start in Miami where Inter Miami is now valued at over $600M.
That’s a lot of money for a team that doesn’t have a permanent home, plays about 45 minutes from its ‘home’ market, and has been underperforming on the pitch since its inception.
As a personal note, I got an Inter Miami training top for Christmas and I love it. And, I went to high school and spent some of my early adulthood in Ft. Lauderdale, so I watch this stuff pretty closely.
To me, I keep coming back to three things when I look at this story:
- The value of these assets isn’t really tied to reality any longer. Instead, the value of these teams is tied to “Premium Power” of pricing an asset that only a small number of people can own, a lot of investment money that hasn’t found a useful place to go, and a gamble that nothing will change in sports business after the pandemic is behind us.
- The play to consolidate ownership of the team is a gamble on the team’s future since they still don’t have a location for their stadium in Miami.
- MLS continues to expand, I’d say, excessively, and the product on the pitch is bound to suffer, harming the value of the teams and the ability of the teams value to grow.
Let’s pop through these one by one, shall we?
First, the valuation of the team.
In the good old days, teams used to be valued at a 3-4x valuation compared to their revenue. Then, Ted Leonsis, I believe, came along and helped change the perception of what the valuation of a team should be to reflect something in the range of 10x valuation for the team.
This is a way of pointing out that in 2019, before the pandemic, the team in Atlanta had the highest reported revenue of any club in MLS at $78M and LA Galaxy was second with $64M. LAFC was at $50M and it drops way off from there.
I point all of this out because it shows that the valuation of the Inter Miami team isn’t in line with reported revenues.
So, the valuation has to be driven by a couple of other things like a limited number of investment opportunities, favorable tax rates, and a bet that happy days will always be here for sports business.
That’s a pretty big gamble because we’ve seen ratings drop, attendance and no-shows are an issue, and we still have structural trends that were undermining ticket sales and attendance before the pandemic.
TBF, MLS’s early-season ratings this year are up and a new TV contract could easily boost all clubs’ revenues.
This brings us to the second piece, this is a big gamble on the team’s future.
This isn’t Miami’s first MLS team.
The Lockhart Stadium site where Inter Miami is playing now was the old home of the Miami Fusion.
But the team and its owners still don’t have a permanent location for their club.
Remember the power framework I’ve talked about a bit over the last few months?
In using the framework, it looks like Inter Miami isn’t holding very strong cards here:
- In looking at the relationship they have with their customers, the customers have all the power, and attendance has been a real problem in Miami.
- In looking at the relationship between the team and their competition, they don’t have a huge amount of power here either because there are tons of other options that people in South Florida can choose without feeling like they have to go to an Inter Miami match like golfing, boating, the beach, the bars, the Marlins, the Heat, the Dolphins, and I can continue.
- In looking at the state of the team’s relationship with their partners or potential partners, again, no dice. The team has no power in their relationship with Miami-Dade County currently and as we’ve seen Broward County and the City of Ft Lauderdale are likely keeping a hiked eyebrow with any promises the team is making.
This sets up a big gamble on the team’s future around three things, minimum:
- MLS’s ability to get a new contract.
- The team’s ability to find a suitable permanent home and build their grand vision.
- The team’s ability to grow a fan base.
Finally, when you pull back and go to the strategic level, you are confronted with MLS’s continued reliance on expansion to grow the game.
In the past few weeks, I’ve highlighted a number of instances where the supply of events and tickets is so great that it is almost impossible to imagine a sell-out happening.
That is a dangerous position to be in right now and makes continued talks around expansion seem a bit dangerous because at a certain point there will be so many teams that demand can never be achieved.
Look at the current product on the field and you’ll see:
- The quality of the games isn’t high enough to justify a premium valuation.
- Most team brands have been developed to the point of commoditization, meaning that they can’t sustain a price premium or differentiation in the market.
This is a problematic situation all around.
I love soccer, but I also feel like the development of the game and the game’s fans in the States isn’t helped by a lot of the actions being taken now.
But…maybe I’m wrong.
- Jay-Z had a long-term strategy. Becoming Jay-Z the mogul wasn’t an overnight thing.
- Don’t be seduced by BS metrics that are easy to come by. Measure what matters.
- Experimentation is essential now.
This one is a bit different than the normal Dave fare, but I like the idea of using Jay-Z’s example to teach a lesson on strategy, focus, experimentation and using the right metrics of success.
Let’s jump right into this one.
First, I’ve been preaching “strategy before tactics” for a good bit of time now and y’all are picking it up to the point that several people mentioned it to me in Las Vegas!
Jay-Z’s long-term success highlights that idea pretty well.
For the new folks, your strategy needs to answer two specific questions:
- Where will we compete?
- How will we win?
After Labor Day, I’m going to take a virtual strategy workshop idea through the DaveWakeman.com portal with 3 specific 60-90 minute sections to help y’all understand the questions and use them in your business, but we will get to that after Labor Day.
In Jay-Z’s case, the idea of being a “business, man” is a grand ambition and within that ambition, he identified the desire to branch out into sports, liquor, clothing, and more.
If you look at Jay-Z’s brand, you’ll see that all of these areas fit into his core competencies as a rapper and fit with his brand.
The point here is that you need to know where you are going before you can actually get started down the road to success.
As we head into the fall, I’d challenge all of you to take a few moments to think about the ambition you have for your business or career. Then think about where that energy should be focused and how you’ll create opportunities in that environment.
As Peter Drucker is famous for saying, “Where can you contribute unique value?”
Second, measuring what matters.
I like this one because in too many cases we hear that “you have to do this because everyone is doing it” as it relates to being on social media, running a specific campaign, or some other nonsense.
Jay-Z has millions of followers on social media and through his ventures and that certainly means he gets attention, but it doesn’t mean that just having him tout something is going to lead to success.
The same situation applies to you.
By this I want you to recognize what matters.
Here’s how it manifests in my business, I know that to reach my goals each year, I need to talk with 100 buyers and potential buyers.
That’s how I track my success.
Those meetings, conversations, calls with potential buyers.
Do I measure other things?
I do because it is important to know the numbers on the newsletter, podcast, and social media reach for advertising purposes, but the big number is 100.
Don’t be fooled by reach or anything else.
Look at your strategy.
Know your goals and objectives.
And, measure what matters.
Finally, a lot of the success here falls into experimentation.
You have to be willing to take a certain amount of risk to create success.
Being successful doesn’t mean being wrapped in risk, understanding the risks, mitigating them as much as possible, and taking prudent ones.
I’ve learned you can’t completely eliminate all risks and that not all of your bets will pay off the way you want.
But it doesn’t mean you don’t try.
A team I work with is really great about using experimentation to roll out new ideas or testing new offerings.
Selling something in one section or one specific segment of their audience to gauge what works and what doesn’t.
Gene Tinner talked about the way that the UFC experiments with their pricing when we were together in Las Vegas.
My goal in highlighting this is to get you to be creative in your thinking, push beyond the way things have always been done, and to embrace prudent experimentation.
Is that too much to ask?
- Broadway’s marketing has often tended to be poor, but this video and campaign is well done, focusing on the things that the ticket buyer is likely to find value in.
- There is still a bumpy road ahead for Broadway and everyone.
I have to admit that when I first saw that there was an ad campaign to celebrate the return of Broadway, I paused because most of Broadway’s advertising has tended to be not fit for purpose over the years.
But this video is well done and focuses on the power of the experience and connects that to the way that a guest would feel coming to a show.
This video comes out at a time when the news about the fall is still up and down with consumer sentiment declining. But the science on the situation is pretty clear: wear a mask and get a vaccine, it doesn’t guarantee 100% safety, but it is pretty safe.
Despite this video, we still have a bumpy road ahead.
The delta variant is complicating re-opening plans because consumer behavior is being impacted.
In other words, folks don’t feel safe going out to events in large groups.
The truth is we don’t know exactly when the delta surge will recede and we don’t know what troubles it will cause us.
Which makes moving forward really difficult.
What we do know is that people have been getting together to watch shows, games, events, concerts, and performances for thousands of years…that will hold true after the pandemic.
And, this campaign is a reminder of that power.
- 200,000 active members of the Ten Club is a lot of recurring revenue!
- Pearl Jam is the epitome of Market Orientation.
- If you cultivate an audience, respect it, and nurture it at all costs…it will pay off. Have I mentioned thank you yet for reading and listening today?
What would the 100th edition of the newsletter be without a look at Pearl Jam?
Nothing I say.
Nothing at all!
First, let’s celebrate one of the great American bands as last Friday saw both Ten and No Code celebrate milestone anniversaries.
I caught myself listening to both albums over the weekend and remembering where I was the first time I heard both of them.
The main reason I put this piece into the newsletter this week is to highlight how customer-focused the band and their fan club are.
Look at the 200,000 fan club members. That’s $40 per person…or $8M a year. That’s some serious recurring revenue, but the value is really there for the fans as well with the fan club’s t-shirt, the access to tickets, the free bootlegs, and, while it is available to everyone, the setlists.
I realized that I point to Pearl Jam a lot here or in my work as an example of doing things well. I also realized that I’m not even in the superfan territory since when I was in Boston in 2018 for the first night at Fenway when the band played “Out of My Mind”, I didn’t realize it was the first time it had been played since 2009 and only the fourth time ever.
But I definitely heard about it from some of my friends.
The major point to keep in mind here is sustainability. Bands come and go, teams come and go, everything comes and goes, but Pearl Jam’s ability to sell out a show anywhere they go in the world remains and that doesn’t happen by accident.
Let’s turn this back onto the world we deal with and learn a few lessons.
Number one, customer focus!
You and I don’t define the value, the customer does. And, Pearl Jam teaches us that over and over again.
The fan club.
The Funko Pop collection.
The merch table at their shows.
The special release of bootlegs and concert videos.
On and on and on.
You have to stay in your market and understand what folks want and need. With a fan club of 200,000…that’s a pretty powerful test market for new ideas.
Second, an audience or customer base is precious.
You should treat them that way.
Peter Drucker said, “A business has one job to create and keep a customer.” He was right about most things. And, he is right about this.
So focus on your customer base and nurture them, keep them close, and never take them for granted.
Finally, think long-term.
Seriously, Jeff talks about wanting to be able to pull off the setlist trick just like the Dead did back when the band was releasing its second album.
Now, they can three nights in Boston without repeating a song.
I bring this up because the big point is that when you think long-term, it helps guide your actions. You grow a sustainable audience.
This matters because it helps you build a more easily sustainable business because you have brand loyalty, customer loyalty, lower customer acquisition costs, less price sensitivity, and more.
It does take work and attention, but what business doesn’t?
As a final note, I always like to point out that working on the “Come Say Hi to Eli” campaign with the non-profit Ed and his wife, Jill, started with a few other families was a real highlight in my career.
- Market segmentation around demographics is often stupid. You segment based on behavior.
- Coming up with revenue streams is about creativity. And, you need to do the proper work of strategy.
- Soccernomics explains the fan lifecycle better than I could.
In this week’s edition, we’ve covered some of my favorite ideas like Market Orientation with Pearl Jam, communications with Broadway, and brand with Inter Miami. So let’s wrap up today’s 100th edition with the Super League and revenue, marketing strategy, and research.
As we often discuss, I do support a team in rugby. I follow the Parramatta Eels and Warrington Wolves.
So I pay attention to this stuff.
In reading through this story, three things stick out to me:
- There’s a lot of talk about older demographics.
- Around a third of the team’s revenues comes from having fans in the stands.
- There is a lack of new revenue ideas or revenue streams.
Let’s go through them quickly.
First, let’s bat down the older demographic thing and look at what we really need to look at.
Market research is important.
Market segmentation is how you turn your research into a map.
To do proper market segmentation, you go through a process of breaking the market up and understanding them using this tool called the “meaningful/actionable” grid.
The grid helps you focus on the things that make people take action.
Looking at the Super League’s challenge, the first step I would take is flip the research on its head and instead of using age as the deciding factor, I’d look at what is driving the behavior because as I’ve mentioned here pretty often if you segment based on age, Prince Charles and Ozzy Osbourne look exactly the same.
And, we know that likely ain’t it!
Second, if a third of your revenue comes from fans in the stands, there is a tremendous incentive to get people into the ground.
In the before times, I did a workshop called Fans For Life. The premise we built over the course of the day was a fan’s bill of rights to help us drive attendance.
At the core of this workshop were three ideas that really pulled all the strings together:
- You are not your customer. (Meaning, you have to do your research to find out what folks want.)
- Take a long-term view. (Meaning, it is a relationship, not a one-night stand.)
- Always add value. (Meaning, you build your brand over the long-term, but you can destroy it in an instant.)
The Super League needs to get back to this kind of thinking around getting fans back into the stands. It isn’t about having an older demographic because we know that age isn’t a really good way of segmenting the market. We look at behavior.
But we can also look at behavior and encourage the behaviors we want. Like going to the ground for a match.
Finally, my favorite topic of revenue.
I’ve said it more than once, but if you feel you are limited in the ways you can make money for your team or organization…it is a sign that you aren’t trying hard enough or you need to look for a new gig.
Opportunities to create value and capture some are everywhere.
Revenue creation is about creativity and that’s the one thing we can typically control.
The way you’ve always done things is a bad way to conduct business, but it happens pretty regularly.
The key here is that everything is tied together.
You do your research well and you understand your market better.
Segmentation: a map of the market.
Targeting: picking a huge target of opportunity.
Positioning: about you or against the competition.
This process will help you understand the value your audience wants and needs. It will give you the chance to launch products and ideas more effectively. And, when you get around to your marketing mix, you’ll be better at advertising your offerings, pricing effectively, distributing your products where folks are likely to buy them, and packaging stuff in the way that makes the most sense.
Where do we begin here?
Always, step back and get the diagnosis correct.
That’s what the Super League needs to do. That’s what you need to do. And, that’s what I try to do with my semi-regular surveys.
As I always, thanks for being here.
The only thing I didn’t get to work in today: discounts are for dummies!
Y’all know to check out the Linktree to sign up for everything!
Also, a good episode of the podcast this week with my buddy, Scott Friedman. I’m proud of him for dedicating so much time and energy to his video series. So I had him on to talk about tickets, pricing, and more.
This story about Booking Protect is amazing! We’ve talked about the way that around a third of people are taking up refund protection now, but look at how much money your venue can make as well! Check them out!
Get the NPS worksheet I created with the folks at Eventellect. Send me an email and I’ll set you up with the easy worksheet so you can understand NPS and gain new market insight.
Guess who is opening an American office? Activity Stream! Check out the new Activate email marketing tool. It will help you reconnect with your audience now!